Enhanced Reporting of the Auditor in Australia: A Critical Review of Beach Energy Limited's Annual Report

AUDITING THEORY AND PRACTICE 1
AUDITING THEORY AND PRACTICE
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Word Count: 2600

AUDITING THEORY AND PRACTICE 2
Executive Summary
This main purpose of this paper is to give research findings on how enhanced reporting of
the auditor has been adopted in Australia. In order to make improvements in the quality of audit
reporting, public companies which are listed have been required to disclose or report on the key
audit matters as a way of improving the material information that is communicated to the users
of financial statements. Plain English must be used in disclosing these matters. These new
disclosure requirements of the auditor started in December 2016. The main aim of this paper is to
review an annual report of a company listed on ASX that is in the S&P/ASX 300 list. For the
purpose of this assignment, Beach Energy Limited is chosen. The annual report of Beach Energy
Limited has been critically reviewed and examined. As per the auditor’s opinion, the financial
reports have been recommended for use by the company’s stakeholders and the general public
(Nigrini 2012, pp. 48). This is because the reports reflect a true and fair financial position as at
June 30, 2017 and financial performance of the company for the financial period then ended
(Beach Energy Ltd 2017, pp. 54-118).

AUDITING THEORY AND PRACTICE 3
TABLE OF CONTENTS
CONTENT PAGE
Introduction....................................................................................................................................................4
Auditor’s independence.................................................................................................................................4
Nature of Non-audit services provided.........................................................................................................5
Remuneration of the Auditor and the Reasons for the changes....................................................7
Key audit matters and procedures performed................................................................................................7
Audit committee...........................................................................................................................................10
Type of audit opinion expressed.................................................................................................................10
Director’s and managements’ responsibilities and those of the auditor.....................................................11
Material subsequent events............................................................................................11
Evaluation of the Effectiveness of Material Information Reported by the Auditor...........................12
Material Information Which Could Be Missing.........................................................................................12
Questions for Follow-up during the AGM...........................................................................13
Conclusion...................................................................................................................................................13
References....................................................................................................................................................14

AUDITING THEORY AND PRACTICE 4
Introduction
Beach Energy Limited is a public company which is listed on ASX and operates in the
energy sector dealing mainly with oil and gas, exploration as well as production. The head office
of the company is located in Adelaide, South Australia (Moeller 2009, pp. 36). The company
supplies its products mainly to the gas market in the east coast of Australia. The FY 2017 annual
report of the company has been analyzed and reviewed (Beach Energy Ltd 2017, pp. 54-118). A
summary of the research findings has been given in the various sections below.
Auditor’s Independence
Auditor’s independence mostly refers to the ability of an auditor to carry out the financial
audit in a free and objective manner, without being subjective. According to the FY 2017 annual
report, the lead auditor has made a declaration the audit has been carried out as per the provisions
of Section 307C of the Corporations Act of 2001. This declaration has been made to the
company’s directors (Messier, Glover and Prawitt 2008, pp. 58). The auditor has mentioned that
to the best of his knowledge, relating to the FY 2017 financial audit, his independence
requirements have not been contravened as required by the Corporations Act of 2001 relating to
the audit, and that the code of professional conduct which are applicable have not been
contravened in any way by the auditor (Singleton and Singleton 2010, pp. 45).
The Nature of the Non-Audit Services Provided
The company, Beach Energy limited, may choose to engage the auditor for services not
related to its financial audit where it is considered that such business engagement between Beach
and the auditor would be necessary and beneficial, due to the experience and expertise required
in particular cases. The position of the non-audit services provided has been considered by the